Property prices not yet at 'meaningful correction': DPM Tharman
PROPERTY prices in Singapore have not seen a "meaningful correction" yet, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Tuesday.
"We've seen some correction in both private property prices and HDB resale prices over the last four to five quarters, but there is some distance to go in achieving a meaningful correction after the sharp run-up in prices in recent years," said the chairman of the Monetary Authority of Singapore at the Credit Counselling Singapore's 10th anniversary luncheon.
"If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth in household incomes in the long term. And that, we must avoid."
Tharman signals cooling measures not likely to be relaxed soonTharman said Singapore properties had not achieved a meaningful correction
SINGAPORE: Signalling that the Government is not intending to relax property cooling measures any time soon, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said on Tuesday (Oct 28) there is “some distance to go in achieving a meaningful correction”.
“If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth of household incomes over the long term, which we should avoid,” said Mr Tharman, who was speaking at Credit Counselling Singapore’s 10th anniversary lunch.
He noted that there has been some correction in both private property prices and Housing and Development Board resale prices over the last four to five quarters, following the sharp run-up in recent years.
“We can never get rid of cycles in the property market, with the upswings in some years being followed by corrections. Our cooling measures cannot eliminate the cycle, but they aim to temper it,” he said. “What this means is avoiding a bubble during the upswing and allowing for a correction in prices subsequently.”
The Government had introduced several rounds of cooling measures, including the Total Debt Servicing Ratio framework and tightened loan-to-value ratios for housing loans.
Last week, National Development Minister Khaw Boon Wan said it is still not the right time to wind down cooling measures and that there is still room for prices to moderate.
Property crash not likely: TharmanYasmine Yahya, The Straits Times, Monday, Jul 07, 2014
The property market is unlikely to crash as the Government acted quickly to prevent a huge bubble from forming, Deputy Prime Minister Tharman Shanmugaratnam said.
But he added that the overall movements of the property cycle are determined by market players. In a wide-ranging dialogue with DBS chief executive Piyush Gupta at the annual DBS Asian Insights conference yesterday, he said the Government had taken each step to temper over-exuberance in the real estate market knowing that what it did might not be enough, but also knowing that if it did too much, it might engineer a crash.
"But we started early and we avoided a huge bubble in the market. That's why we won't see a crash," said Mr Tharman, who is also Finance Minister. "But I think a further correction will not be unexpected."
He added: "I don't think the cycle is over but the market determines the cycle. The Government has put in place rules, stamp duties and restrictions... but market players will determine where the cycle goes."
In the hour-long dialogue, which touched on subjects ranging from Mr Tharman's outlook on the global economy to his favourite things about Singapore - the multi-racial society, the food and the weather - Mr Tharman also expressed his optimism for the Chinese economy.
"Certainly amongst large economies it has the most complex economic challenges. It also has, in my opinion at least, the most capable economics team amongst the larger economies."
China faces many challenges, he noted. As the Chinese leaders undertake the major task of transforming the economy into a market-driven one, Chinese leaders also have to contend with "legacy" issues. These include shadow banking, over-investment and high levels of credit that have built up in the wake of the 2008 global financial crisis. Nonetheless, he said China's government is "closer to ideal than anything they've had in a long while, both in terms of capability as well as the ability to make decisions".
Mr Tharman was also optimistic about India's prospects. The first thing new Prime Minister Narendra Modi has focused on is "clarity and getting things done", he noted. "Mr Modi is quite focused on streamlining approvals for projects, especially infrastructural projects, on reducing the number of agencies you need to go to at the federal and state level, and just getting things done." This in itself is a significant improvement, Mr Tharman said.
Touching on productivity, Mr Tharman encouraged consumers to do more themselves, giving an example of how hotels in Sweden leave coffee pots on the table for customers to pour themselves.
"It's the quality of the coffee that counts," he said to laughter and applause.
This article was first published on July 5, 2014.
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Property crash unlikely, measures in place: Tharman
Property prices in Singapore may fall further, said Deputy Prime Minister Tharman Shanmugaratnam on Friday.
“I don’t think the (property) cycle is over,” he said to a question at the DBS Asian Insights Conference.
He said it is unlikely that the market will see a crash as the Government has introduced cooling measures early to quell any potential housing bubble.
Mr Tharman’s remarks come on the back of calls by some, including the chairman of property developer City Developments (CDL), for the government to review some of the cooling measures it has put in place.
On Wednesday, CDL chairman Kwek Leng Beng said, “The overall picture seems to suggest that it may be timely now for the Government to take another look at the cooling measures introduced and make adjustments accordingly.”
A day earlier, the Urban Redevelopment Authority (URA) released flash estimates which saw private residential prices in Singapore fell 1.1 per cent to 209.3 points in the three months ended June 30. This followed a 1.3 per cent decline in the previous three-month period.
Prices have been falling for 3 straight quarters since last year.
Mr Kwek said that because of the cooling measures which the government has introduced since 2009, “foreigners were choosing to plough their investment dollars into countries like Britain, Australia and the US over Singapore, while Singaporeans have been investing abroad.”
“We are losing these investments to other countries even though these foreign properties have a higher risk profile,” Mr Kwek told The Straits Times. “It is unlikely these investment dollars will return to Singapore.”
However, the government seems to hold to its position that the measures are still necessary.
“The market determines the cycle and the Government has put in place rules and stamp duties,” Mr Tharman said on Friday. “We’ve also pumped in a fair bit of supply into the market. But market players will determine where the cycle goes.”
Dismissing fears that the market will crash, Mr Tharman, who is also the Finance Minister and chairman of the Monetary Authority of Singapore, said, “[I] don’t think we’ll see a crash, because we moved early enough. And we moved each step of the game, knowing full well that what we do may not be enough, but if too much we might engineer a crash.”
“So, we started early, moved step by step and avoided a huge bubble in the market. That’s why we won’t see a crash. But I think further correction will not be unexpected,” he added.
Mr Tharman’s remarks echo that of the Ministry of National Development on Monday.
“It is still too early to relax the property market cooling measures,” said a ministry spokesman. “If the measures are removed prematurely, we could see a sharp increase in demand and housing prices.”
Read also: “CDL chairman again calls on gov’t to ease property curbs“.